I'm not sure if this is what's happening but when I had a Compaq computer it had 2 partitions, the second partition was used for Compaq's System Save. Unfortunately, as I installed more programs and created more files in the C partition, partition D was no longer large enough to hold the System Save image file. Compaq was never able to tell me how to increase the size of the D partition so I disabled their System Save and just used it for other files. At the time I was running Win98. I no longer have a Compaq computer so it may be something else entirely. Maybe someone that has one could give you more information.

That's actually what it sounds like is happening, but the System Restore points are what's going on D:. If you go into System Restore, you should be able to see how much hard drive space is reserved for restore points. Adjusting this may bring back some of the missing space. (It may also erase your previous restore points, so do it at your own risk...)

If the last restore point is 586MB and you have several of them, that could easily be what's taking up the 3.5GB.